WASIM IQBAL
ISLAMABAD: Ahead of rising winter demand, the government has imposed a petroleum levy on imported Liquefied Petroleum Gas (LPG).
Ministry of Energy (Petroleum Division) has imposed regulatory duty on imported LPG which shall be equivalent to the levy on locally produced LPG in a bid to provide a level playing field to the importers and local producers.
The regulatory duty was imposed at the same ratio as levied on locally produced LPG. Earlier, the government imposed petroleum levy on locally-produced LPG at the rate of Rs4,669 per tonne with effect from November 1.
LPG Distributors’ Association Chairman Irfan Khokhar confirmed imposition of petroleum levy on imported LPG. He said the government on Friday notified imposition of petroleum levy on imported LPG with effect from November 2. Talking about the impact, he said, “It is an unjust levy which will lead to an increase of Rs 100 per domestic cylinder and Rs 400 per commercial cylinder”.
He argued that domestic LPG prices stood at around Rs 65,000 per tonne, compared to the Rs 85,000 per tonne cost of the imported product, which discouraged importers.
He said that the locally-produced product was purchased by the 30 powerful marketing companies through bidding, while another 114 marketing companies were forced to rely on expensive imported LPG.
The government imposed 35 percent various duties on imported LPG. The new petroleum duty will further up the prices of imported LPG.
On November 2, 2017, Finance Ministry had moved the summary suggesting levy of regulatory duty on imported LPG after the approval of Economic Coordination Committee (ECC). Petroleum Division imposed the levy on imported LPG without approval from ECC, sources said.
Director General (liquid gases), Ministry of Energy (petroleum division) had already notified the sale of LPG produced in Pakistan a petroleum levy at the rate of Rs4,669 per metric tonne with effect from November 1, 2017.
The levy, which was earlier imposed in 2011 and 2013 was struck down by various courts on different grounds. LPG stakeholders, including marketing companies and distributors, are again considering challenging the levy in court.
In 2016, the total sale of LPG stood 1.15 million tones. Out of total sale, imported LPG was 550,000 tons. Irfan khokhar said the imported LPG was almost 45 percent of the yearly consumption, added the consumption increased by 55 percent in winter.
He termed the fresh imposition of levy on imported LPG to discourage the import of LPG. He said that government is unable to provide natural gas to consumers and now discouraging importers whose ships carrying 10,000 tons reached to Pakistan.
In October 2017, the government secured the power to impose a petroleum levy after the federal cabinet quietly approved a policy to determine LPG prices in October through a committee of producers that would be binding on the Oil and Gas Regulatory Authority (OGRA) to notify and enforce across the country.
Under the summary, the Ministry of Energy (Petroleum Division) proposed that a seven-member committee be constituted, consisting of five public-sector LPG producers — Oil and Gas Development Company Limited, Pakistan Petroleum Limited, Pak-Arab Refinery, Pakistan State Oil and Sui Southern — led by an additional secretary and coordinated by another senior official of the petroleum division for the issuance of guidelines to Ogra for LPG prices.
The LPG prices are revising by Ministry of Energy (Petroleum Division) from time to time, based on the recommendations of the LPG pricing committee.
